Episode summary
WIX Stock: The Most Asymmetric AI Bet?!
The Intrinsic Value Podcast
· · Hosts: Daniel Mahncke, Shawn O'Malley
Summary
Wix is framed as a controversial value-and-AI setup rather than a clean quality compounder. The hosts argue that the stock’s roughly 30% post-earnings drop, and about 70% decline over the past year, reflects fears that generative AI will commoditize its drag-and-drop website builder and undermine future customer acquisition. Even so, the business still screens as financially solid, with revenue trading around 4 to 5 times free cash flow and a market cap the hosts say does not fully reflect the cash generation.
The core debate is whether Wix is merely a legacy site builder or a broader SMB operating system with sticky back-end tools. The discussion highlights two reported segments: creative subscriptions at about $1.4 billion of 2025 revenue and business solutions at close to $600 million, plus partner revenue of roughly $750 million. The hosts emphasize 105% net retention, improving cohorts, and strong pricing power, while also noting that premium subscribers peaked in 2023 and then fell by about 200,000.
Base 44 is the swing factor. The AI app-building acquisition is presented as a fast-growing, AI-native product that could benefit from Wix’s 300 million registered users, distribution, and balance sheet, even if competition from Lovable, Cursor, and others is intense. The bear case is that LLM providers or rival AI tools can replicate Wix’s backend features and squeeze customer acquisition, while the bull case is that Wix’s cash flows and distribution make Base 44 effectively a free option.
Key takeaways
- The hosts say Wix is a hit-or-miss case, but if it still matters in 5 years it could be a multibagger from today’s price.
- Wix’s 2025 revenue is described as roughly $1.4 billion from creative subscriptions and about $600 million from business solutions, with partner revenue around $750 million.
- Net retention is about 105%, which the hosts say shows customers spend more over time even after lower-tier churn and price increases.
- Base 44 is presented as the asymmetric upside: a fast-growing AI app builder backed by Wix’s distribution and cash generation.
- The main risk is that AI tools and large LLM providers can copy Wix’s backend features and make customer acquisition much harder going forward.
Notable quotes
“If Wix is still relevant in, let's say, 5 years, I think it will most likely have been a multiagger from today's prices”
“Wix's net retention rate is about 105%. And it's not only that customers stay, that obviously also means that they become more and more profitable each year”
“WIX actually just released earnings last week and they sent down the stock by 30%”
“the competition in this space has never been more intense and there's no sustainable competitive advantage”
How the episode opens
How you feeling about today's company? — I say it's a controversial one. It doesn't help that earnings actually send it down 30% last week. — Does that mean the thesis is broken? — No, I don't think so. I think it's a hit or miss case. If Wix is still relevant in, let's say, 5 years, I think it will most likely have been a multiagger from today's prices.
It doesn't sound like you'd be surprised though if the company's just completely gone then either. — No. No, I wouldn't be. Got to be honest there. When you first told me you'd cover Wix, I thought it would never make it into the portfolio. But I mean, some of the stats you sent me are are impressive.
I thought so, too. But if you just look at the numbers and also the business case that I'm going to make, hopefully, I think it's a pretty interesting idea. — Okay. Well, should we do it? Let's do it. Let's get into it.
We should.
We usually cover companies that are either well-known compounders or companies that have the potential to become well-known compounders. And obviously the latter is even more attractive in some ways, but we've also bought some value plays for our portfolio before like companies like Crocs and Ulta come to mind and the hit rate on those hasn't been too bad. And as far as I know, today's pitch Wix sort of sits somewhere in between.
Right, Daniel? I don't think you're pitching it because you think it's a buy and hold compounder. It's also not an asset heavy cigar butt type of business either.
And in fact, when I look at the financials for WIX, they look more than solid. And it makes you wonder why this business is trading at one of the most depressed levels it's ever traded at.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- wix ai impact
- generative ai website building
- customer retention and stickiness
- vibecoding vs drag-and-drop
- wix valuation and portfolio addition
Companies and tickers mentioned
- WIX
- Wix.com
- Base 44
Watch the episode
Watch “WIX Stock: The Most Asymmetric AI Bet?!” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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